WTM 2017: UK urged to reduce VAT to attract long-haul

UK authorities should reduce taxes like VAT to make the destination more attractive to long-haul visitors.

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"No city imposes a tourism tax unless they are desperate. Berlin was near bankruptcy when they did it"

Figures from ForwardKeys, presented during a session at WTM London, showed that the level of growth for UK inbound arrivals from key markets, such as the US and China, had started to slow in the second half of this year, despite the continued low value of the pound.

Ufi Ibrahim, chief executive of the British Hospitality Association, said the UK was already ranked as one of the worst countries in the world for tax competitiveness.

“The UK is a very strong brand and I think the Great campaign has been really good,” she said. “But from a business perspective we are facing serious cost pressure which is creating significant heavy winds – not just heavy taxes but also business rates and huge labour pressure.

“But there is a silver bullet and that is to reduce VAT in the UK – that would give businesses the opportunity to be able to compete.”

Ibrahim also criticised the London Assembly’s support for a possible tourism tax in the city.

“This gives us grave concern,” she added. “Our VAT is already double the rate of other countries in Europe. We are enable to compete and adding an additional tax bites the hand that feeds us.”

Tom Jenkins, chief executive of the European Tourism Association (ETOA), shared this concern about the imposition of extra taxes.

He said: “No city imposes a tourism tax unless they are desperate. Berlin was near bankruptcy when they did it – you have to be seriously up against the wall to do it. Tourism taxes are very expensive to collect and it’s also counter-productive because it encourages day trippers.”

Rochelle Turner, research director of the World Travel and Tourism Council (WTTC), added: “We believe it’s important to have intelligent taxation and taxes need to be easy to collect by businesses.”